Australian whitebox builders hurt by Intel?

Smaller players claim chip maker uses unfair tactics.

An Australian whitebox builder and a distributor have backed the European Commission's allegations that Intel engaged in illegal competitive practices that harmed consumers.

Eric Kwon, owner of Newcastle systems builder Tri-Benedict, told CRN that Intel didn't play fair when it came to rebates it paid smaller whitebox makers.

Last Tuesday, the European Commission released documents it said showed computer makers avoided AMD processors under pressure or following incentives from Intel.

"Intel offers rebates on certain products, for example, when you buy a certain Intel product, you can get a discount when you buy an Intel motherboard," Kwon said. "Problem is, we don't buy motherboards."

Kwon said it was unfair for whitebox builders because big corporations such as Intel were making the "most margins" out of smaller businesses such as his.

"[Intel gives] companies like Dell special treatment and discounts," he said. "We're a small player and unless we merge with other smaller companies to create a voice than there's nothing we can do about it."

Kwon said small PC makers have no choice but to sell Intel products: "A couple of years ago, Intel came out with the Intel Inside campaign. Why would the vendor - who has large market share - need to do that?"

He said the campaign would allow whitebox builders to sell hardware without customers questioning the quality of the processor inside the machine.

"[Intel] created this perception with customers that it didn't matter which machine it bought as long as it had one of its processors inside," said Kwon. "It gives us no choice but to use Intel products because customers will ask us 'is it an Intel chip inside?' "

Antony Sheen, managing director at national distributor Altech said the Federal Government should intervene.

"I believe there's truth behind in what the European Commission is saying," he said. "If Intel is offering major vendors rebates it definitely hurts smaller, local builders."

Sheen said incentives gave big PC makers an unfair advantage over smaller competitors.

And if something wasn't done to redress the imbalance as he saw, he said Australia was "going to end up with no local channel".

"The Government needs to step in and support local IT businesses to improve the local market, which will then generate employment and income for local systems builders," Sheen said.

An Intel spokesman said the chip maker believed the European Commission's decision was wrong.

"[Intel] has appealed the decision to the Court of First Instance of the European Community," the spokesman said.

"The decision ignores the reality that the microprocessor market is highly competitive, resulting in lower prices and better products for system builders and consumers." 

Intel president Paul Otellini denied the commission's findings.

"No, that's not the case," he said. "We don't do exclusive deals and when our time comes we will show that. The EU can release evidence early, something we cannot do."